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Ghana begins to tap oil, but can it avoid the 'resource curse'?

Long known as one of Africa's most stable nations, Ghana began pumping oil last week. But a recent visit to the oil boom town of Takoradi reveals a host of concerns.

By Hereward HollandContributor / December 21, 2010

Traditional dancers perform in front of a model oil rig at a ceremony marking the start of new oil production at Takoradi, Ghana, on Dec 15.

Hereward Holland/Reuters

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Takoradi, Ghana

While politicians in Ghana's capital, Accra, toasted the birth of the West African nation's oil sector last week, disquiet grew in the booming coastal oil town of Takoradi.

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“We are all suffering. All the fish, all the tuna, gather around the light on the oil-rig at night and stay there during the day. The government has to compensate us,” says Joseph Tetteh Narh, explaining that the mile-wide no-go area surrounding the offshore oil rig that began pumping just last week has cut local fishermen's catch by two thirds.

As Ghanaians flock to Takoradi to profit from the expected oil boom, residents claim rent prices have quadrupled and landlords are forcibly evicting tenants. Traffic now clogs the streets, slums are swelling, hospitals are swamped, unemployment and drug use are on the rise, and commercial sex workers swarm downtown at night, says Donkris Mevuta, executive director of Friends of the Land, a local nongovernmental organization.

To make matters worse, oil production has brought just 600 jobs to the town so far, he says, underwhelming expectations.

Now local rulers are demanding a cut of oil revenues and transparency advocates are questioning whether the country is ready to avoid the type of corruption and instability that has crippled the progress of fellow West African oil producer, Nigeria.

“Politicians have left people expecting very high returns. The very limited space the people have for participation [in the oil industry] is a recipe for disappointment and conflict,” says Mr. Mevuta. “Oil is a blessing, but the way we manage the environmental and social impacts will show whether it is a curse.”

Local chiefs demand 10 percent of oil revenues

In spite of being the source of much of the country’s gold, manganese, bauxite, timber and cocoa exports, lawmakers have long neglected Ghana’s Western region, says Awulae Agyeifi Kwame, a traditional chief from the western town of Nsein.

In November, Mr. Kwame and other chiefs took a petition to Parliament demanding ten percent of oil revenues for the Western region to develop its poor infrastructure. Although Parliament rejected the proposal, it stoked debate about how to distribute the windfall, which government estimate will be around $400 million in 2011 and increase as production ramps up.

“Since [independence from Britain in 1957], we [in Western Ghana] have been cheated,” Kwame says, wrapped in a thick Kente cloth that resembles a toga. “We all want to see the success of the industry, but not at our expense.”

Although Kwame downplays any hint of violence, his sentiments echo those of militants in Nigeria’s Niger Delta region, who attack pipelines and kidnap expatriate oil workers in a purported battle against the theft of its oil and in protest at the environmental devastation.

“If our voice is not heard, there are those who might handle it in a more radicalized way,” Kwame says.

Is Ghana prepared for the flow of oil?

The problem with oil, says Nicholas Shaxson, author of ‘Poisoned Wells: The Dirty Politics of African Oil’, is that the question “who gets what?” starts to dominate local and national politics. It can be incredibly divisive.

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